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brand strategies: Profit in Loss

The prize: A share of the 54 percent of the U.S. population that
is overweight. Not everyone uses prescription drugs to lose weight,
but the market potential is huge.

The complication: Redux, the first prescription obesity drug,
had recently been yanked off the market by its manufacturer because
of the high-profile "Phen/Fen" fiasco - a combination of two diet
drugs that was implicated in heart valve damage in some patients.
Roche Laboratories, makers of Xenical, had to figure out a way to
overcome the negative halo that had enveloped the category. "First,
we had to make it clear that Xenical was a totally different
product. It's non-systemic: It's not absorbed in the blood stream,
it works locally in your stomach," says Dan Reinhardt, product
leader at Roche.

The company also had to ensure that consumers understood other
important information - and not all of it was pleasant. For
example, Xenical patients must stick to a low-fat diet. If you're
on the drug and have a meal that has more than 30 percent of its
calories from fat, you can wind up with a symptom typically not
discussed in polite company: uncontrollable bowel movements.
Failure to communicate the side effects would not only torpedo good
word of mouth, it would be bad for patient health.

Roche execs also had to convey to diet-weary consumers that the
product could really help shed pounds while still creating
reasonable expectations about its effectiveness. Finally, the team
at Roche had to figure out some way to meet its business objective,
keeping people on the program long enough for refills to pour
in.

The Discovery

The team at Roche needed ideas. So, in late 1998, the firm hired
Strategic Business Research in Horsham, Pennsylvania, to conduct 10
focus groups around the country. The research revealed that the
company's target market of obese patients was far from cohesive.
Gender, the presence of children in the household, employment
status: all created different challenges and barriers to sticking
with a weight-loss program. For instance, a parent might have to
prepare two different meals - a low-fat dinner for himself and good
old mac and cheese for the kids. A single working person might find
office lunches to be the biggest hurdle.

To verify and flesh out their findings, Reinhardt next
commissioned a quantitative study of 1,000 consumers from Attitude
Measurement Corporation in Southampton, Pennsylvania. The company
tested 800 variables in the weight-loss experience, including
demographic and psychographic measures. It also tested for ratios -
how important one variable was to dieters versus another.

Attitude Measurement discovered an even more complex
segmentation. Gen Xers, for example, had more fast-food eating
habits than baby boomers. The company also discovered a wide array
of reasons why people wanted to lose weight. Some consumers wanted
to improve their health, others hoped to fit into a dress for a
special occasion. Younger patients were more concerned about the
cosmetic aspect of obesity, whereas older consumers were more
interested in the medical implications such as hypertension, high
cholesterol, and diabetes.

Armed with this information, Roche execs realized they would
have to tailor their consumer education messages to specific
demographics. They then set out to determine how to market Xenical
to disparate groups, from the single male concerned about his abs
to the mother of four thinking about the calories from family pizza
night. "If the content isn't relevant, people aren't going to read
it and they won't remember it." says Reinhardt. "We were going to
have to go way beyond the brochure."

The Tactics

"Our research led us down the path to create a one-to-one
marketing program," Reinhardt says. Roche named the two-year
program XeniCare and offered it free to Xenical patients. Launched
along with Xenical in April 1999, the program is personalized
around 75 different variables.

Consumers find out about XeniCare through their doctor, in
accompanying literature when they fill their prescription, or from
Xenical's direct-to-consumer ads. To enter the program, consumers
either log on to the Web site or dial an 800 number and answer a
detailed questionnaire. (Roche tapped MicroMass Communication, in
Raleigh, North Carolina, to create the program materials.) The
questions range from basic demographic information to more complex
inquiries about barriers to weight loss. For example, patients give
the most important reason they want to lose weight and how often
they eat away from home. They even indicate whether they eat out
for business, at fast food restaurants, or with friends and
family.

The answers determine the mix of information on fitness,
nutrition, and the weight-loss psychology that the customer will
get. The customer receives a special four-page brochure that
incorporates the patient's name and some of the information he had
provided in the questionnaire. For the first 12 weeks, a series of
new brochures arrives, each with different food, nutrition, and
exercise articles. The mailings come every two weeks to start, on a
monthly basis from week 13 until one year, and then every three
months after that. Via the Internet, patients move at their own
pace.

The Payoff

Some 150,000 patients have enrolled in XeniCare, according to
Reinhardt. People in the program have lost an average of 17 pounds
in eight weeks, compared with an average weight loss of 13 pounds
of non-enrollees. Program members are also less likely to
experience side effects than people who are taking Xenical without
participating, and they report making positive changes in their
eating behavior and physical activity. What's more, XeniCare has
less than a 2 percent dropout rate.

XeniCare is also meeting its business objectives: The refill
rate for program enrollees is 77 percent, higher than the 69
percent for those who use Xenical but aren't in the program. And
XeniCare patients tend to stay on the medication longer. In fact,
80 percent of XeniCare participants say that the program increases
their ability to stay on a weight-loss schedule over the long term.
Datamonitor estimates that worldwide sales of Xenical will reach $2
billion in 2005, doubling their 2000 sales estimate.

What the Critics Say

"The advanced level of customization and personalization really
sells the program," says Joyce Flory, principal of Communications
for Business and Health, a health care Internet consulting firm in
Chicago. "But I would have advised them to be more comprehensive
with their Web site, to make it a lifestyle portal in a sense. What
you want to do is create a relationship with a potential customer.
Hopefully, they won't be taking Xenical for the rest of their
lives, so you want to create an ongoing relationship with the
customer and maybe the entire family about weight loss and
food."

Kym White, managing director of Ogilvy PR Worldwide in New York,
says XeniCare could benefit from becoming more interactive, perhaps
by adding more features, like a support group element or a buddy
system. "That's a challenge for any Web site - telling consumers
why they need to tune in more than once or twice," she says.

Reinhardt says they are planning to make the site more
comprehensive. He points out, however, that only 20 percent of
XeniCare participants receive their information on the Web,
although 40 percent have Internet access. XeniCare's online
participants match general trends on the Internet, says Reinhardt:
They tend to be younger, and, although 88 percent of XeniCare
participants are female, Web users tend to be male. He speculates
that men may feel more comfortable working through the Web site
because it provides anonymity. The snail mail version, on the other
hand, allows people to easily keep the information on hand.